Trade Idea review in Greenbrier

On 4/6 I posted the following Earnings Trade Idea for $GBX:

Now let’s take a look at how the stock reacted to a solid Earnings report on 4/7:


The stock is up nearly 5% as of this post, hitting a high of $64.71 today. Now let’s see how the Options pieces look from the Trade Idea:

Long April 60/65 1×2 Call Ratio: 4.00/.90 (so you can close for a $2.20 credit)
Short April 55 Put Calendar: .80/.05 (so you can close for a $.75 debit)
Net if you close all pieces is +$1.45

If I had done this trade I would at least close the Long Call Spread here. I would leave the Put Calendar for now as I would not mind owning at $55 at May expiration.

- DM 9:45 AM CST

Options Expiration for March 27

Herbalife $HLF  I am Long the 45/43 1×2 Put Ratio and Short stock at $43 (hedge). I will let the Long PS auto-exercise for +2.00 and the remaining Short $43 Puts will assign, closing the Short stock at B/E. Options Net final will be: $2.08

ProShares Ultrashort 20+ Year Treasury $TBT  I am short the $45 Calls (covered). I will adjust to future expiration today (2 weeks out likely) for a credit, try to boost the Options Net above $2.00


- DM 11:00 AM CST


50/50 Basket update

It has been a while since I’ve had much to talk about with this particular Trading approach. I have had some activity in March so I’ll do a review:

$CAPN  This was a new short stock trade on 3/4 at $9.15 & it hit a Stop at 6.00 on 3/11 (closed)

$CRMD  This was a new short stock trade on 3/11 at 9.00 & hit a Stop at 7.50 on 3/12 (closed)

$EYES  This was a new short stock trade on 3/9/2015 & has a Stop set at $14.90 (hod on 3/13)

As a refresher:  I scan for stocks that are “50% above the 50 SMA” as a starting place. I view these as VERY extended.


- DM Noon CST


Earnings Trades update

Last full update can be reviewed here.

Current Positions:

Netflix $NFLX  I remain Long stock at $345 with Short January 2016 $450 Calls (covered calls). I am Long the April 02w 470/440/420 1×2 Split Put Ratio (stock protection). No change

Google $GOOGL  I am Long stock at $525 (as of 3/6, let L Calls exercise) and Short the Sep $550 Calls (covered calls). Activity this week

Centene $CNC  I am Long stock at $56 (2x size) and Short the Mar $60 Calls (covered calls, 2x size). No change this week

Twitter $TWTR  I am Long stock at $41.99 with Short June $45 Calls (covered calls). No change this week

Buffalo Wild Wings $BWLD  I am Long the Mar 190/200/210 Call Fly and Short the June $195 Calls. No change this week

Boston Beer $SAM  I am Long the 260/270/280/290 Call Fly. No change this week

MercadoLibre $MELI  I am Short the Mar 135/140 Cs & 130/125 PS. No change this week

Air Methods $AIRM  I am Long the Mar 45/50/55 1×2 Split Call Ratio. Activity this week

AutoZone $AZO  I am Short the Mar 690/620 Strangle (new)

Cooper Companies $COO  I am Long the Mar 170/175/180 Call Fly with Short $155 Puts (new)


- DM 11:05 AM CST


Knowing WYNN to shift gears

I have had $WYNN on my pullback buy list for a while and have been patient. On 3/5 I elected to take my 1st stab at building a position for the Submarine Basket by doing the following:

StO the March 06 weekly $137 Puts for a $1.25 credit

In reviewing the price action today along with the Option activity for next week’s expiration I have elected to do the following:

BtO the March 13 weekly 137/135 1×2 Put Ratio

This trade was done for a $1.05 credit but takes margin

For those that don’t know what this means, I am Long the $137 Puts and Short the $135 Puts at a 1:2 Ratio. For every 1 contract I am Long the $137 Puts, I am short 2 contracts of the $135 Puts.

I will monitor the position for this week the rest of the day – it has a bid/ask under $.50 right now. My Options Net overall is currently: $2.30


- DM 9:50 AM CST


Weekly Option expiration – the plan

This week I have 5 positions that have March 06 weekly Options as part of the trade that will need tending to:

American Express $AXP  I own the 78/80/77 RRCS (submarine basket). I will take stock at $78 and sell Call premium further out & use proceeds to BtC the $80 Calls (the short $77 Puts will go poof)

Baidu $BIDU  I am short the 215/195 Strangle (submarine basket). Hopefully both pieces go poof, keep premium collected

Expedia $EXPE  I own a RRCS involving the $77.5 Calls & $76.5 Puts (the July $87.5 Calls are the other piece). I will take stock at $77.50 and the short Puts should go poof

Fossil Group $FOSL  I am Long stock at $85.01 with a 87/85 Collar. Undecided but likely put on a new Collar

Google $GOOGL  I am long the $525 Calls (other part of Diagonal Call Calendar is the September $550 Calls). Earnings trade. Undecided on what I will do


- DM 11:30 AM CST


Trading Activity

Home Depot $HD  I initiated an Earnings trade on 2/23: Long February 113/115/108 RRCS. I added a Long Stock piece in P/M on 2/24 at $116.10 and sold this at $117.25 on 2/24 (a tag along trade). I have BtC the $108 Puts, StC the $113 Calls, and adjusted the remaining Short $115 Calls up to the $116 strike. Options Net is now: $3.26 and stock gains of $1.15

Fossil $FOSL  Long stock at $85.01 and added a March 06w Collar for a .09 debit (Submarine Basket)


RRCS = Risk Reversal Call Spread
BtC = Buy to Close
StC = Sell to Close

- DM 9:30 AM CST


Trading Activity

Skyworks Solutions $SWKS  I adjusted the Short Calls to the August $85 strike (covered calls). Options Net now: -$.68

McGraw Hill $MHFI  I added a March $100 Collar (Fab 5). Options Net now: $4.60

Schlumberger $SLB  I sold the Long Stock piece at $84.80 and BtC the Short $85 Calls. Options Net final: -$.74 and stock gains of $7.917


- DM 9:30 AM CST